Starting A Side-hustle And Tax Tips

Do you have a side-hustle? If so, here are some tax tips to help you stay compliant with the Australian Tax Office. Every year Australians earn approximately $2 trillion in income from their work and other sources such as rental properties or investments.

Of that total, about 4% comes from people who don't report all of their taxable income, which is illegal and will result in fines up to 50% of the owed taxes plus penalties for evasion. There may be many reasons why someone would want to hide their earnings; they might not want an ex-spouse or creditors knowing how much money they make, or it could be because paying taxes means less money left over for themselves each week.

Starting a side-hustle and your taxes can be tough. Here are some tips for starting a side-hustle and what to do if you don't know how to get started with tax time in Australia.    Starting a side hustle is an excellent way of making extra money on the side while still working full time. Side hustles come in all shapes and sizes, from freelance work like writing or coding to driving people around town or babysitting on the weekends.

You must register this income so that it doesn't end up costing you more than necessary at tax time! The Australian Tax Office has simplified things by coming out with some handy calculators which will help you determine how much spare cash is

Starting A Side Business In The New Year? What You Need To Know is Listed Below

Over the course of the past few years, thousands of people in Australia have rethought their approach to employment by beginning their own companies. They have done this either to supplement the income they receive from their "day job" or to free themselves entirely from the constraints of traditional employment in order to experience the autonomy that comes with being their own boss.

The problem is that far too many people who have made the switch have not given any attention to the repercussions that the change will have on their tax situation. To provide some relief from the anxiety, I have compiled the following tax advice that all new business owners should be familiar with:

Make Your Income Known

Your business revenue is subject to taxation and must be reported on your personal income tax return. This is the most important fact to keep in mind. The Australian Taxation Office (ATO) won't agree with you if you say that your side hustle is only a hobby.

Make the Claims You Are Entitled To

Any costs that are incurred as a direct result of operating your business can be deducted from your income.

It is important to keep in mind that most sharing economy platforms will deduct a fee or a commision from the total amount that you charge your consumer for the service if you choose to sell it through their platform. This charge or commision is deducted from your taxable income.

Do not forget to claim the proper amount of home-office expenses, such as internet fees, landline or mobile phone bills, costs of office equipment, and other similar charges, if you manage the administrative aspect of your business from the comfort of your own home.

Make sure that you only claim the portion of the expense that is relevant to your business when it comes to costs that pertain to a combination of business and personal or domestic use.

It's Time to Fend for Yourself Now

Especially if you've just left a paid employment, you're undoubtedly used to having your taxes withdrawn directly from your paycheck by your employer. This is presumably the case for you now as well. However, given that you are now operating a business on your own, you are responsible for actively managing your cash flow in order to save money for any future tax obligations. It's possible that this is something that should go without saying, but sadly, one of the most common mistakes that new businesses make is not putting money away to pay their taxes.

Additionally, you could be required to register for the GST. However, you are only required to register for GST for the majority of enterprises if the total turnover from all of your businesses (including the one you are now operating) is greater than $75,000.

You are able to make a claim for the Goods and Services Tax (GST) that you paid on business purchases. You will, however, be required to record your GST sales and purchases to the ATO on at least a quarterly basis by submitting what is known as a Business Activity Statement (BAS).

Therefore, those who engage in self-employment are subject to additional tax requirements. You are responsible for taking care of your own tax obligations (and potentially your own super). However, there are some tax advantages to having a self-employed status.

For instance, you have access to all of the tax concessions that are made available to small enterprises, such as the possibility of deducting the whole purchase price of capital assets up until the 30th of June in 2022. That means you can instantly deduct the cost of any plant, tools, or equipment that you use in your business, including things like computers and even the majority of motor cars. This applies to anything that you buy for your company.

Avoid Problems With The ATO

My recommendation, in order to keep dealing with taxes stress-free, is to hire an accountant. The majority of people find that simply handing over all of their information to a tax agent and allowing the agent to prepare their BAS and tax return is significantly less stressful. This is because they are able to be assured that the work that is done will be correct and comprehensive.

An expert agent will typically be capable of finding unusual tax deductions that you were not aware you might claim. As a result, hiring an experienced agent can frequently pay for itself multiple times over. The best part is that you can deduct the cost of hiring a tax agent from your taxes!

Home-Based Side Jobs You Can Do To Increase Your Income

It is projected that wage growth will be just 1.5% during 2021-22, which is 0.25 percentage points lower than the projected rate of inflation.

As a result, it is not surprising that many of us are pondering creative ways to make additional income, whether it be to contribute towards covering needs such as food and utilities, put away more money in savings, or pay down debt.

Canna Campbell, a financial planner, has put tens of thousands of dollars into the stock market in order to set up a passive income stream. She does this by purchasing shares whenever the income from her side business reaches a threshold of one thousand dollars.

Market research, doing Zoom calls for businesses like Farron Research, and selling unwanted stuff on websites like eBay and Gumtree are some of Ms. Campbell's favourite work-from-home side hustles that she is able to accomplish from the comfort of her own home.

She suggested that when looking for a side hustle, your existing skills and the things that you enjoy doing were the two most crucial factors to take into consideration.

According to Ms. Campbell, if you detest what you are doing, there is no use in doing anything like sitting there working on your phone or laptop for hours on end because that is not what having a side hustle is about.

It all comes down to the abilities you possess, the things you are willing to put up with, and the question of whether or not the financial investment is worthwhile for you.

Ms. Campbell, the author of "The $1,000 Project," has stated that she does not participate in internet surveys since the earnings do not typically correspond to the amount of time that is put.

She recommended setting up a separate bank account for your extra money and naming it something that reflects your objective, such as "vacation" or "debt free," since this will help you clearly see the results of your labour and keep you motivated.

Here is a list of six side hustles that you can do from the comfort of your own home with nothing more than a computer, a phone, and the desire to make some extra money.

Social Media Manager

When time is at a premium, as it frequently is for owners of small businesses, one thing that many of them would gladly eliminate from their to-do lists is social networking.

If you are proficient on Instagram, Facebook, and Pinterest, in addition to more recent platforms such as Clubhouse and TikTok, then you may be able to get work managing social media content strategy, publishing, and engagement by offering your services to others.

The going pay is somewhere between $20 and $50 an hour.

Content Writer

You could write blog posts or email newsletters for companies, or you could even conduct proofreading if you have a talent for words and find it really irritating when an apostrophe is placed in the wrong place. In addition to this, you can promote your business on freelancing platforms such as Upwork.

The going fee is approximately $40–$100 an hour on average.

Virtual Assistant

There are some people who are just naturally very organised, and if this describes you, you might become an excellent virtual assistant.

Virtual assistants are responsible for a diverse array of administrative chores, such as replying to enquiries given by email and phone, billing customers, delivering email newsletters, and developing PowerPoint presentations.

The going fee is from $15 to $55 an hour.

User Tester

User testers are hired by businesses to do specific tasks on their websites and provide feedback in order to assist the businesses in streamlining their websites.

After registering with your email address, you will start receiving alerts for new testing jobs, and the majority of the time, payment will be made through PayPal.

If you want to boost the amount of jobs that are available to you, your best strategy is to join up with different firms. Checkealos and UserTesting are a few of examples of businesses that specialise in user testing.

The going pay is about between $10 and $50 an hour (but some jobs are paid in smaller increments).

Data Entry

This is a chore that you could complete while watching the commercials of your most recent fixation with streaming TV.

Many of us despise performing duties related to data entry, but if you don't mind working with numbers and are adept at using a spreadsheet, it is a simple method to bring in some more income. Jobs for data entry are often advertised on freelancing platforms like Freelancer and Upwork.

The going pay is between $9–$26 an hour on average.

Website Builder

This is not the place to learn how to write code, but if you are capable of developing a respectable website by making use of a template platform such as Squarespace, then this one might be a suitable choice for you.

Be sure to have a couple of your own websites under your belt or websites that you have made for free for family or friends so that you can demonstrate that you are capable of producing a professional-looking end product.

Australians Are Warned To Report All "Side Hustle" Income During COVID-19

As the end of the current fiscal year approaches, Australians who supplemented their income with a "side hustle" during the COVID-19 outbreak are being cautioned to disclose their gains to the tax office in order to avoid any penalties.

One of the most prominent accountants in Australia has made it clear that the Australian Taxation Office is going to place a significant emphasis on the country's citizens who participate in the so-called "gig economy" and make money in addition to their principal employment (ATO).

Jobs like as driving for Uber, delivering food for applications such as Deliveroo, and mowing lawns for websites such as Airtasker are examples of the types of work that fall under the umbrella term "gig economy."

Elino Kasapidis, Senior Manager of Tax Policy at CPA Australia, stated that during COVID-19, a lot of people who were struggling to make ends meet went to the gig economy.

"The Australian Taxation Office (ATO) is aware of individuals' participation in "side hustles" and checks the information provided by individuals' tax returns against the data provided by platforms such as Uber, Airbnb, and AirTasker. This means that the gig economy is in big trouble when it comes to tax time."

Ms. Kasapidis stated that even though it may seem as though the ATO is waging war on those who are striving to get ahead, employees in the gig economy are eligible to claim certain deductions.

You are required to report any revenue you receive from driving people about, doing odd jobs or freelancing, renting out your car or storage space, running social media accounts, or selling things when you file your tax return.

The good news is that some of the costs you incurred in order to acquire this money can be tax deductible.

Only the portion of your use that is directly related to your job can be deducted from your earnings. You are not eligible to deduct all of your car expenses only because you accepted an Uber ride when you were on your way back from seeing your mother.

She also cautioned that the Australian Taxation Office was tightening down on cash-in-hand payments, which is commonly referred to as the "black economy."

It is not against the law to be paid in cash rather than through electronic means; nonetheless, you are required to disclose the cash amounts on your tax return.

It is believed that the black economy in Australia is responsible for up to fifty billion Australian dollars, which is equivalent to three percent of the country's gross domestic product (GDP).

"Everyone in Australia is impacted by the black economy, which is often referred to as the shadow economy. It is a term that refers to dishonest and illegal acts that occur outside of the systems that govern taxes and regulations "according to the ATO.

Even though the majority of people are honest, there are still certain individuals and businesses who wilfully try to avoid paying the correct amount of tax.

The information that is provided on this website is only of a general nature and should not be construed as personal financial advice. This information has been compiled without taking into consideration your own goals, requirements, or financial condition in any way.

Before you take any action based on the information provided on this website, you should first assess whether or not the material is appropriate given your goals, your current financial status, and your requirements.

How to Increase Your Second Job's Tax Return or "Side Hustle"

At the moment, the buzz phrase of the moment is "side hustle." You do have a day job, but you also have skills and expertise that you know can make you money, so in addition to the reality of working from nine to five, you decide to start your own business so that you may increase your income, improve your skills, and carve out a specific market niche.

It's possible that it will become successful, in which case you'll be able to put your day job on hold. On the other hand, it is possible that it will merely continue to tick over, in which case you will continue to run both at the same time. In any case, you must not neglect to pay your taxes. When one takes on a second job, there are additional financial commitments that must be satisfied. If you choose to disregard them, you may find yourself in hot water with the tax collector very fast. Now, for those of you who are considering establishing a side business, here are my four most important tax suggestions.

Make Your Income Known

If you own and operate a business, you are required to pay taxes on the total amount of income generated by that business. Therefore, each sale that you make will be included in the calculation of your taxable turnover and will need to be reported on your tax return for the current year. If you are paid in cash, you are required by law to report that income. Many companies fall into the ATO's nett because they fail to report their cash sales, whether on purpose or by accident.

In addition, you are required to register for GST if the annual revenue of your business is more than $75,000, or even if it appears that the annual revenue might surpass $75,000 in the near future. This tax of 10% is charged to each and every taxable sale that you make, and it must be remitted to the ATO on a quarterly basis. You are able to deduct the GST that you pay on your purchases and costs from the GST that you owe; the tax collector is the only one who pays the nett amount.

It is crucial that you keep track of your revenue, which implies that you need to keep solid records of this information. There are many different accounting software packages available that can assist you in staying on top of your finances; however, if you are not someone who is good with numbers, you might want to think about hiring a professional bookkeeper to perform the job for you. Even if there is an additional expense involved, there is one less stressful activity that needs to be worried about.

Make a Deduction Claim

You are allowed to deduct from your profits the total amount that you spend on purchases and expenses that are directly related to your company. After then, the difference between your taxable income and your allowable deductions is subject to taxation.

Consequently, you should make sure that you claim all of your company's expenses, whether those charges are to the cost of purchasing stock, heating your workplace, marketing your brand, or travelling to meet consumers (or any of the numerous other expenses you might incur).

When it comes to deductions, the most important rules to keep in mind are as follows:

• The cost must have been incurred by your company's business
• The expense has to be related to your company's operations and cannot be personal or household-related in any way (which means you can't claim the money you spend on your weekly groceries or your utility bills)
• Any expenses that are partly business-related and partly private or domestic in nature need to be apportioned. This might be quite important if, for example, you conduct your business from home and can claim home office charges
• Make certain that you can provide evidence that the money was spent by your company. An invoice or receipt is the best kind of evidence to utilise, but in many situations, a bank or credit card statement can also serve as proof.

Are you able to claim any of the following tax deductions? Although the specific tax breaks that apply to your company will vary depending on the nature of your business, in principle, the following tax breaks may be available to you.

If you conduct a business out of your home, you may be eligible for tax deductions related to the portions of the following costs that are attributable to the operation of the business:

• Utility bills
• Phone bills
• Internet
• If you have a "business area" that is only used for business, like an office, a percentage of your mortgage interest and charges
• If you run a business out of your home, you should be aware of the potential consequences of the capital gains tax (CGT); a portion of the profit you make from the sale of your property may not be exempt from the CGT as is customarily the case for your primary residence.
• Imagine that you need to improve your skills in order to advance your business. If this is the case, you may be eligible to take a tax deduction for the money you spent on classes, training, seminars, conferences, and other similar events; but, the expense must be directly related to the profits your firm generates.
• Imagine that you are interested in launching a brand-new company. If this is the case, you are typically eligible to claim tax deductions for preparatory work such as feasibility studies, market research, business planning, and consulting services regarding the appropriate structure for your company.
• Remember to take into account your superannuation. According to the Association of Superannuation Funds of Australia, approximately 75 percent of self-employed women have either no superannuation savings or savings of less than $40,000; therefore, once your business is up and running, it makes sense to put money away for your retirement as soon as your cash flow allows it. This is a particularly acute problem for women.
• Unfortunately, there are no tax deductions available for the cost of child care if your new business is located outside the home.

Benefit From The Tax Breaks

There is some good news regarding taxes. If you are aware of how to take advantage of the available tax breaks and credits, your new company might save a significant amount of money each year.

To begin, if you need to purchase any capital equipment for your company, such as a car, a van, computer equipment, office furniture, or plant to manufacture a product, you can claim an immediate deduction for the full cost of each capital item that costs less than $150,000. This includes a car, a van, computer equipment, office furniture, and plant (as opposed to writing off the cost over several years, which is how these assets are normally treated). It is in your best interest to take advantage of this unique offer while you still can because it is scheduled to expire on June 30, 2020.

In addition, while you are still evaluating the viability of your new business, you might be able to claim deductions for expenses you incur, despite the fact that the business has not yet started (and indeed, may never start if your research reveals that the business isn't viable). This is because you are still evaluating the viability of the business. Obtaining professional guidance on how to structure your firm, conducting research on the feasibility of the business, and drafting a business plan are all examples of charges that may be tax deductible.

Set Aside Money For Taxes

It's possible that this is something that should go without saying, but sadly, one of the most common mistakes that new businesses make is not putting money away to pay their taxes. Especially if you've just left a paid employment, you're undoubtedly used to having your taxes withdrawn directly from your paycheck by your employer. This is presumably the case for you now as well.

But since you are now running your own firm under your own name, nobody is going to be able to deduct anything from your income. Because of this, you will need to actively manage your cash flow in order to save money for any future tax obligations.

Keep in mind that cash flow is the most important thing for small enterprises. Therefore, even though it seems like you are making a profit from your business, if your customers aren't actually paying your invoices, you will have a difficult time paying your obligations, and the ATO is one organisation that you most certainly do not want to end yourself in debt to!